Agency people feel the squeeze

Jul/07/2008 07:34

The squeeze is on for ad agencies. Last week I received a phone call from someone who was just let go from her job at a big New York agency. It seems that despite all the meetings to try and convince clients to spend more money the people at the top have said “no more dollars”. The account she was working on (pharma company) has decided to “recycle old DTC ads and cut back on media spending”. She now finds herself looking for work as do half a dozen other people who were working on the account. After my conversation with her I decided to call some other people on the agency side of the business to see what was going on and what I found is that there are a lot of people who are scared about losing their jobs because DTC budgets are shrinking.

When Revolution Health let go of some staffers Mr Case said it was because “pharma was woefully underinvested in online”. What he meant was that the dollars are harder to come by than the weapons of mass destruction in Iraq. All sectors of the advertising industry are going through a transition now trying to determine the new business model that integrates off and on line with the new segments of “one”. Ad agencies have been purchasing digital agencies over the last year and a lot of smaller agencies are starting to disappear. While consolidation is sometimes good a lot of the creative people who made these small shops are leaving rather than get caught up in big agency politics and processes.

I thought that pharma would be cutting back on DTC ads as the market is pretty saturated and getting that share of voice is getting harder and harder to do without spending big dollars. The business model is also changing within pharma and more and more people are asking “what do I get for the dollars we are spending?”. The recent failure of the Byetta spots for example points to the risks of DTC investment that doesn’t provide returns (drive sales is all that the accounting people want to know).

In my conversation with my friend at the agency she had told me how the agency had lobbied for more campaigns and more dollars since the beginning of the year only to be told that “the decision was in the hands of senior management”. Power Point after Power Point, early morning flights to present to clients again and again lead to hope that the dollars would be shortcoming but alas in the end the dollars were not there and media plans were scaled back and the decision to use material that was “in the can” rather than produce new material sealed their fates. I asked her if she was looking for work on the agency side again to which she responded “no way! Even the AE’s on consumer products are sweating right now”.

If the agency people had only embraced digital media more as part of an integrated plan than trying to get DTC managers to spend money on TV things might be different but then that takes a new way of thinking.